We believe in serious trading, and when we predict something, we like it to be as sane and close to reality as possible. Given the recent trends across markets this year, our Research and Education team elaborated on the 2024 trends and considered how markets could look throughout the new year.
Here are seven projections for the global markets in 2024
1- Inflation Finally Returns to 2%
The world’s sanity is finally back after the global economy experienced significant headwinds in the last few years. Those led to soaring inflation rates forcing central banks around the world to raise interest rates to multi decade high.
However, the aggressive monetary policy by governors globally was successful in taming inflation rates in 2023. Global inflation eased towards the targets gradually reaching 6.6% in 2023 and 4.3% in 2024. The US was successful in reaching an inflation rate of 2.3%, the UK’s inflation rate averaged at 3%, and the EU reached 3.5%.
Aggressive tightening policy is now a history in which the ECB has cut interest rates for the first time in Q2 of 2024, the US also saw its first Fed rate cut since 2019, and 5 quarter-percentage-point rate cuts are on the table, and we finally witnessed the base rate in the UK falling back to 4% and is expected to gradually fall to 3% by the end of 2025.
2- The U.S. Dollar Deposed from the Throne
The US Dollar continues to lose its grip on the throne in the face of gold and the BRICS currency.
The long-awaited discussion in 2023 has become a reality in 2024 as the US Dollar is losing its glory while facing several new threats.
Gold's strong yet modest demand and more countries joining the BRICS alliance raises doubts over whether currency pegs to the dollar should be maintained over the long term.
The question arises whether or not the pricing of major commodities should even be in dollars. State monopolies will no longer prevail and price competition will be introduced.
3- WTI Oil Prices Back on the Rise Targeting $88 Per Barrel
Oil prices have been on a bullish momentum due to mixed economic performances in China and the U.S.
Weaker economic activity in the U.S. combined with China’s rise in economic growth (impacted by the Chinese government’s aggressive stimulus) fueled an ongoing rally in oil to new annual highs of $88/barrel.
4- Hostility Between the U.S. and China is Back on the Radar
The ongoing economic dispute between China and the United States persists on fronts, mostly leaning towards the technological rivalry between the two nations.Despite the Chinese President's historic visit to the United States last year, there has been no progress or resolution to the hostility.
At a time when Americans are busy with the presidential elections, the Chinese are preoccupied with improving growth rates, raising domestic consumption rates, and concluding foreign investment agreements to increase growth rates
5- Gold Prices Went Against Investors’ Expectations
Although the Federal Reserve began its first steps to reduce interest rates, gold prices went against investors' expectations.
Gold prices dropped to levels close to $1,800. It appears that this slow reduction of interest rates did not give gold the positive momentum to make any upward progress.
It’s worth noting that returning stability in the region contributed to adding pressure on gold’s price movement.
6- A New Record for the Equity Market
Will there be a new high for the U.S. equity market at the end of 2024? Expectations indicate that the benchmark S&P 500 index will conclude the year at a value of 5,000.
Wall Street is giving serious consideration to the idea of a "soft landing," in which inflation dropped to 2.3%, close to the Federal Reserve's target of 2%. On the other hand, GDP growth remains solid.By the end of the year we might see further progress with a "significant rebound" in S&P 500 earnings, up around 13.6% from 2023.
However, the U.S. equity market is currently facing volatility during the presidential election as investors are forced to deal with uncertainty.
7- The Road Towards an All-EV Style Dominates
The EV sector is on the verge of evolution, led by companies like TESLA and BYD that are approaching budgeting differently through innovative alternatives for raw materials used for batteries. This move plays a major role in boosting EV appeal.
However, some of the challenges EV manufacturers may face throughout the year include higher interest rates for a longer period and material scarcity.
The content published above has been prepared by CFI for informational purposes only and should not be considered as investment advice. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell. The information provided does not have regard to the specific investment objectives, financial situation, and needs of any specific person who may receive it, and is not held out as independent investment research and may have been acted upon by persons connected with CFI. Market data is derived from independent sources believed to be reliable, however, CFI makes no guarantee of its accuracy or completeness, and accepts no responsibility for any consequence of its use by recipients